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Money for a Whistle Blower

A $300,000 settlement has been reached in the federal suit of a former official who said the MTA fired him because he objected to a $65 million subway-construction contract that, he said, was linked to an MTA board member‘s kickback.

Last month’s out-of-court settlement between Leroy H. Graw, the MTA and former top MTA executives was announced this week by Graw‘s attorney, Louis J. Cohen of Calabasas. According to Cohen, the settlement also “cleanses Graw’s employment record” of an untruthful MTA finding of termination with cause. Cohen said he had recommended that his client take the matter to trial, and possibly receive more money, but that Graw chose instead to “get on with his life.” Graw, who now has a college-level teaching career in California, was not available for comment.

The case was set for trial October 5.

As the Weekly reported in April, Graw had brought suit against his former employers after being terminated on September 25, 1996. According to pretrial testimony in the case, this happened soon after MTA board member and then--L.A. City Councilman Richard Alatorre asked top MTA executives to fire Graw. Graw was allegedly fired so he “could not interfere with Alatorre‘s improper attempts to award a [$65 million] contract to Metro East Consultants,” according to the judge’s summation of the allegation. Graw was fired in haste, just two days after one MEC contractor, The East Los Angeles Community Union, or TELACU, received an invoice from a subcontractor for a $13,200 tile roof on Alatorre‘s new Eagle Rock home. TELACU’s president, David Lizarraga, is a longtime Alatorre crony.

In a deposition early this year, when asked whether he‘d demanded that then--MTA chief executive Joe Drew fire Graw, or whether the $13,200 TELACU roofing job represented a kickback, Alatorre invoked his Fifth Amendment right not to incriminate himself. This was a privilege the councilman invoked more than 100 other times in the course of the same deposition.

Cohen maintained that “Richard Alatorre is the biggest winner in the settlement.” Alatorre, recently a $100,000-per-year appointee to the state Board of Unemployment Appeals, is under investigation by federal and local agencies for alleged financial and political misdoings. Cohen said that Alatorre’s defense in such matters would have been impaired if he had been compelled to repeat his Fifth Amendment responses in open court as a witness in the Graw case.

Cohen said he believes Alatorre was protected by the strong political connections he developed in the course of his 27 years in the state Assembly and on the City Council.

Although Graw‘s firing took place before he could explain to the full MTA board exactly why he objected to the $65 million 1996 MEC contract proposal (and just three hours before he was scheduled to talk to the same board about the rising number of suspect change orders in other MTA subway contracts), he later did tell that board how the MEC proposal was originally rejected by an appointed MTA expert panel. But, allegedly at Alatorre’s request, MTA executive Drew tried to reinstate the $65 million contract after submitting a memorandum of explanation that, according to testimony in the case, had actually been prepared by a former Alatorre transit aide, Sharon Neely. Neely was not an MTA employee, but Drew testified that she‘d done it for him as “a friend.”

In a June deposition, Linda Bohlinger, who temporarily replaced Drew as MTA head after Drew was fired, said she was told by Tom Malcolm, a Jones, Day, Reavis and Pogue attorney long involved in MTA matters, that Drew and Neely were then having an affair. “There’s no evidence of that,” Malcolm said Tuesday. “It‘s hearsay.”

Malcolm, who also was the lawyer of record representing the MTA against Graw’s suit, said the settlement was too high.

Drew, a decorated Army veteran and a former Kern County chief executive officer, resigned at the end of 1996, after it was disclosed that he had attended a charity golf event sponsored by MEC before he tried to reinstate the MEC contract. The event benefited the El Sereno Youth Center, then a favorite Alatorre charity, which in turn employed a firm run by Alatorre‘s wife and sister-in-law to plan its events. Drew’s assistant, Stanley Phernambucq, who actually fired Graw -- allegedly at Drew‘s orders -- also resigned at the end of 1996. Both were named as defendants in Graw’s suit. Alatorre this year chose not to run for another term on the City Council and formally retired in June.


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